What we need to do is what China did (15 years ago) and tell the world we need your capital, but we don’t need your companies, says Bansal.

BENGALURU: India’s most successful internet entrepreneurs –Flipkart’s Sachin Bansal and Bhavish Aggarwal of Ola—have raised the banner of nationalism in their fight against foreign-origin rivals, urging the government to design policies which will favour homegrown companies.

"What we need to do is what China did (15 years ago) and tell the world we need your capital, but we don't need your companies,” said Bansal, executive chairman and cofounder of Flipkart, while speaking at the Carnegie India Global Technology Summit here.

The coordinated push amounts to seeking protectionist support from the government against US internet giants Amazon and Uber. The two poster boys of the Indian internet defined their battle as one in which capital plays the most important part and not innovation, implying that the US companies are burning cash in a price war.

“What's happening in both our industries (is that) there is narrative of innovation that non-Indian companies espouse but the real fight is on capital, not innovation. The markets are being distorted by capital,” Aggarwal, the CEO of Ola.

While the sentiment among these entrepreneurs and investors about government protection for local companies has been growing, this is first time that founders of two major companies have spoken about it publicly. While both Flipkart and Ola are ahead of their global rivals right now, Amazon and Uber have claimed otherwise and been able to gain significant market share even after they entered the market late.

The duo also claimed that dominance by the American companies could impact the creation of high- value jobs in India. They also argued that if local players dominate the market, then security, data and privacy will all be under Indian control.

For both Amazon and Uber, India has become a must win market after they lost out to Alibaba and Didi Chuxing, respectively, in China. Flipkart and Ola are important in determining investor sentiment for Indian startups as the two companies have raised a combined $4.4 billion, and their valuation will likely take a further hit if they lose their top standings.

“We need to take a more India-centric approach than trying to become an ideal country based on standards set by the rest,” Bansal said, citing Brexit and Donald Trump's victory in the US presidential election as indicators of similar sentiment overseas.

This sentiment is finding some resonance in industry, too, as representative bodies are in favour of level playing field. Sharad Sharma, the cofounder of software products think-tank iSpirt, said that it is within the power of the government to create policy where it picks outcomes, like China, or create a level playing field where the best team wins.

“India's implicit policy is that it is a level playing field, but the actual practice is not that and is tilted towards the MNCs. Government needs to put mechanisms in place to create a true level playing field,” he said.

Flipkart and Ola are in talks to raise fresh capital but both have found it hard to raise money at their existing valuations because of changing sentiment about the prospects for consumer internet and the threat of their being overtaken by American rivals.

Amazon and Uber have been investing aggressively in India, with analysts and investors estimating that their monthly burn rate, or losses, is double that of local rivals. This, local entrepreneurs feel, puts them at a disadvantage.

“It's much easier for non-Indian companies to raise capital because they have profitable markets elsewhere,” said Ola’s Aggarwal. “You might call it capital dumping, predatory pricing or anti-WTO but it’s a very unfair playing field for Indian startups.”

But even as both Flipkart and Ola raise the nationalism flag saying they are Indian companies, both are over 80% owned by overseas investors. While Ola is registered in India as ANI Technologies, Flipkart's parent is registered in Singapore.

But Aggarwal countered this by saying that even Chinese internet giants like Alibaba are majority- owned by overseas investors. “The crux of what makes a company Indian is the entrepreneur and the management team, and where they are based,” said Aggarwal.

Indian companies are not behind their overseas rivals in terms of effort in lobbying with the government though, but feel they need to be treated equally. Aggarwal said that he and Ola's chief operating officer Pranay Jivrajka spend half their time on lobbying, meeting ministers and bureaucrats.

“There is a glass ceiling for the Indian startups. If I want to meet the PM it won’t be as easy as a foreign guy coming to India. I understand that dynamic and we need to make sure government sees us as major contributors to society, which is not full there," Aggarwal said.

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